Which of the following would reduce the ability of the self-correcting mechanism to direct an economy out of a recession quickly?
a. a decrease in the real rate of interest
b. resource prices that are inflexible in a downward direction
c. an increase in aggregate demand
d. a low level of savings
B
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In the Solow model, if saving per worker initially exceeds investment per worker,
A) the economy will experience inflation. B) the capital—labor ratio will increase. C) investment per worker will decline. D) saving per worker will decline.
Changes in the Lorenz curve since 1929 in the United States indicate that
A) the distribution of income today is identical to what it was in 1929. B) the distribution of income is slightly less equal today than in 1929. C) the distribution of income is slightly more equal today than in 1929. D) the distribution of income is much more equal today than it was in 1929.